Economy

As Iceland is an island with no borders with other countries and surrounded by the North-Atlantic ocean, Icelanders have developed into being one of the most technologically advanced and digitally-connected country in the world.

Iceland has a young population and a fully funded pension system. The population of about 338,000 is centered around the city of Reykjavik, the northernmost capital in the world. The domestic language is Icelandic, and the first foreign language is English.

Economic ActivityTourism in Iceland has surpassed marine production, measured as a contributor to GDP. Another large contributor to GDP are energy intensive industries that are based on the use of low cost, abundant and environmentally friendly renewable hydro- and geothermal energy.

The current account surplus reflects boost in tourism. Investment in the aluminum and associated energy sectors that, over the medium term, are expected to broaden the export base, boost foreign exchange earnings and enhance external debt sustainability.

FAQ

Yes, it is the smallest country in the world with its own currency and flexible exchange rate. It is a small flexible economy and in such countries there is a case to interpret the current account differently since it is more volatile. A current account deficit might be optimal since it has to absorb large, lumpy investments and due to consumption smoothing.

Articles

The Consumer Price Index (CPI) based on prices in March 2018 is 452.0 points (May 1988=100), 0.56% higher than in the previous month. The CPI less housing cost is 388.1 points, 0.36% higher than in February 2018.Winter sales have come to an end causing an increase in prices of clothing and footwear by 4.4% (effect on the index 0.15%). Cost of owner occupied housing (imputed rent) rose by 1.4% (0.29%).The CPI is 2.8% higher in March 2018 than in March 2017 while the CPI less housing cost is 0.3% lower than one year ago.The CPI compiled in the middle of March 2018, 452.0 points, is applicable for indexation purposes in May 2018. The old credit terms index for May 2018 is 8,925 points.

The Consumer Price Index (CPI) based on prices in February 2018 is 449.5 points (May 1988=100), 0.60% higher than in the previous month. The CPI less housing cost is 386.7 points, 0.60% higher than in January 2018.

Winter sales have partly come to a close causing an increase in prices of clothing and footwear by 4.9% (effect on the index 0.16).Cost of owner occupied housing (imputed rent) rose by 0.7%(0.15%).

The CPI is 2.3% higher in February 2018 than in February 2017 while the CPI less housing cost is 0.9% lower than one year ago.

The CPI compiled in the middle of February 2018, 449.5 points, is applicable for indexation purposes in April 2018. The old credit terms index for April 2018 is 8,875 points.

The Consumer Price Index (CPI) based on prices in January 2018 is 446.8 points (May 1988=100), 0.09% lower than in the previous month. The CPI less housing cost is 384.4 points, 0.57% lower than in December 2017.The CPI is 2.4% higher in January 2018 than in January 2017 while the CPI less housing cost is 0.9% lower than one year ago. The CPI compiled in the middle of January 2018, 446.8 points, is applicable for indexation purposes in March 2018. The old credit terms index for March 2018 is 8,822 points.

The Consumer Price Index (CPI) based on prices in December 2017 is 447.2 points (May 1988=100), 0.27% higher than in the previous month. The CPI less housing cost is 386.6 points, 0.62% higher than in November 2017.

Cost of owner occupied housing (imputed rent) declined by 1.1% (effect on the index -0.22%). Cost of international airfares increased by 24.5% (0.22%).

The CPI is 1.9% higher in December 2017 than in December 2016 while the CPI less housing cost is 1.6% lower than one year ago.

The CPI compiled in the middle of December 2017, 447.2 points, is applicable for indexation purposes in February 2018. The old credit terms index for February 2018 is 8,830 points.

The Consumer Price Index (CPI) based on prices in November 2017 is 446.0 points (May 1988=100), 0.16% lower than in the previous month. The CPI less housing cost is 384.2 points, 0.49% lower than in October 2017.

The CPI is 1.7% higher in November 2017 than in November 2016 while the CPI less housing cost is 2.3% lower than one year ago.

The CPI compiled in the middle of November 2017, 446.0 points, is applicable for indexation purposes in January 2018. The old credit terms index for January 2018 is 8,806 points.